Buying Property with Cryptocurrency

What is cryptocurrency?

A cryptocurrency, or crypto-asset, is a digital currency that operates on a protocol known as blockchain, using algorithms to ensure the reliability and traceability of every transaction. Because they are entirely digital, cryptocurrencies are stored in digital wallets and exchanged through dedicated trading platforms. Transactions take place on a peer-to-peer (P2P) basis, without relying on a trusted intermediary such as a bank. Although cryptocurrencies have no physical form, they are increasingly used for real-world transactions, including property purchases.

A growing range of financial services has emerged around digital assets. Among the most relevant to property buyers are crypto-backed mortgage loans, sometimes called crypto loans, which allow holders of cryptocurrency to use their digital assets as collateral for a real-estate purchase.

The advantages of a crypto-backed loan

Holders of a substantial cryptocurrency portfolio can take out a crypto-backed loan on a dedicated platform, where algorithms or the platform itself set the interest rate. The arrangement offers an alternative to traditional bank lending for buyers whose wealth is concentrated in digital assets. No conventional bank account is required, as the crypto holdings themselves serve as the guarantee.

Crypto loans are also accessible to borrowers with lower incomes or in situations where a standard bank application would be difficult. Repayment terms tend to be flexible, allowing the borrower to repay at their own pace provided the final deadline is met, and extensions can often be arranged without additional fees.

Financing a property purchase through the blockchain

Beyond simplifying administrative procedures, the blockchain offers a particularly interesting mechanism for real estate through tokenisation, a process by which a property can be divided into multiple digital shares, each of which can be purchased separately. This lowers the entry point for property investment considerably. Among the wider advantages of using cryptocurrency for a real-estate transaction are enhanced privacy, speed and efficiency of settlement, simplified cross-border payments, the conversion of digital wealth into a tangible physical asset, and reduced transaction costs.

A proven model in the United States

It is in the United States, and particularly in Miami, that cryptocurrency property transactions have gained the most traction. The BARNES international network recently completed the largest crypto transaction of 2022 in the US, and the second-largest sale ever recorded in Florida, for a 650-square-metre apartment in a prime downtown neighbourhood. The transaction, settled in Ethereum (ETH) for the equivalent of seven million dollars, took fewer than fifteen days to complete.

The procedure in the US is notably straightforward. A lawyer representing both buyer and seller opens a dedicated ETH or BTC account for the transaction. At closing, the seller can choose to convert the amount into dollars or keep it in cryptocurrency. The stability of stablecoins such as USDC helps to mitigate concerns around price volatility for both parties. Similar transactions are gaining ground elsewhere, including a sale in Braga, Portugal, where an apartment changed hands for three Bitcoins.

As digital assets reshape the way property is bought and sold, Bordeaux continues to attract international buyers drawn to its period apartments with stone facades and elegant townhouses in prime neighbourhoods. A full selection of opportunities is available among the properties for sale in Bordeaux.

The consultants at BARNES Bordeaux are equipped to guide buyers through every type of transaction, from the initial property valuation to the final signature. The team is available via the contact page.

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